Could my wife provide us services on a self employed basis and put all her earnings into a pension

DeepSporran

My mistake, michaels and Dazed_and_C0nfused. Ignore my incorrect comment. It’s been a long day for me.

nigelbb

michaels said:

Suppose my wife provided and billed £150 of services to our household on a self employed basis every week (10 hours of cooking and cleaning for example)

Could she then put all her annual earnings (about £8k) into a pension and receive tax relief of 2K on top?

Her current pension pot is small so she will not pay any tax on drawdown.

Thinking out loud following some of the discussion about self employed NI contributions.

What is the point in paying your wife out of your taxed income then putting that income into a pension? Isn't it better to put the money directly into a pension yourself & reclaim the tax paid?

zagfles

nigelbb said:

michaels said:

Suppose my wife provided and billed £150 of services to our household on a self employed basis every week (10 hours of cooking and cleaning for example)

Could she then put all her annual earnings (about £8k) into a pension and receive tax relief of 2K on top?

Her current pension pot is small so she will not pay any tax on drawdown.

Thinking out loud following some of the discussion about self employed NI contributions.

What is the point in paying your wife out of your taxed income then putting that income into a pension? Isn't it better to put the money directly into a pension yourself & reclaim the tax paid?

AA/LTA issues presumably

michaels

nigelbb said:

michaels said:

Suppose my wife provided and billed £150 of services to our household on a self employed basis every week (10 hours of cooking and cleaning for example)

Could she then put all her annual earnings (about £8k) into a pension and receive tax relief of 2K on top?

Her current pension pot is small so she will not pay any tax on drawdown.

Thinking out loud following some of the discussion about self employed NI contributions.

What is the point in paying your wife out of your taxed income then putting that income into a pension? Isn't it better to put the money directly into a pension yourself & reclaim the tax paid?

Mostly it is about wanting to be fair, rewarding both of us for our contributions to the household and making sure we both have pension provision - oh and of course when it comes to drawdown it means we can make use of both our personal allowances....

NedS

As mentioned previously (I believe), to be considered genuinely self employed by HMRC, your wife must be carrying out a trade or profession, and being a housewife isn't a recognised trade or profession by HMRC.

michaels

NedS said:

As mentioned previously (I believe), to be considered genuinely self employed by HMRC, your wife must be carrying out a trade or profession, and being a housewife isn't a recognised trade or profession by HMRC.

But being a cleaning operative or a food preparation operative or a laundry operative or an administrator or a child minder or a taxi driver is?

crv1963

michaels said:

NedS said:

As mentioned previously (I believe), to be considered genuinely self employed by HMRC, your wife must be carrying out a trade or profession, and being a housewife isn't a recognised trade or profession by HMRC.

But being a cleaning operative or a food preparation operative or a laundry operative or an administrator or a child minder or a taxi driver is?

What I'd like to see although it is unlikely- that a spouse could pay into their spouse pension pot just as you can transfer as much money as you like without penalty to your spouse bank account. We're in the position of me paying into Mrs CRV SIPP almost 80% of her take home pay from my higher income. By the time we get to take it we plan on her drawing just under the personal allowance.

nigelbb

michaels said:

nigelbb said:

michaels said:

Suppose my wife provided and billed £150 of services to our household on a self employed basis every week (10 hours of cooking and cleaning for example)

Could she then put all her annual earnings (about £8k) into a pension and receive tax relief of 2K on top?

Her current pension pot is small so she will not pay any tax on drawdown.

Thinking out loud following some of the discussion about self employed NI contributions.

What is the point in paying your wife out of your taxed income then putting that income into a pension? Isn't it better to put the money directly into a pension yourself & reclaim the tax paid?

Mostly it is about wanting to be fair, rewarding both of us for our contributions to the household and making sure we both have pension provision - oh and of course when it comes to drawdown it means we can make use of both our personal allowances....

You are still paying her out of taxed income when you could be paying into your own pension & claiming tax relief. How does that ever make financial sense?

zagfles

nigelbb said:

michaels said:

nigelbb said:

michaels said:

Suppose my wife provided and billed £150 of services to our household on a self employed basis every week (10 hours of cooking and cleaning for example)

Could she then put all her annual earnings (about £8k) into a pension and receive tax relief of 2K on top?

Her current pension pot is small so she will not pay any tax on drawdown.

Thinking out loud following some of the discussion about self employed NI contributions.

What is the point in paying your wife out of your taxed income then putting that income into a pension? Isn't it better to put the money directly into a pension yourself & reclaim the tax paid?

Mostly it is about wanting to be fair, rewarding both of us for our contributions to the household and making sure we both have pension provision - oh and of course when it comes to drawdown it means we can make use of both our personal allowances....

You are still paying her out of taxed income when you could be paying into your own pension & claiming tax relief. How does that ever make financial sense?

He's just said! Presumably the OP will not have any spare PA in retirement whereas his wife will. So assuming he's a basic rate taxpayer after his conts, he'd get 20% tax relief on any extra conts and pay 15% on the way out (accounting for the TFLS).

Whereas his wife could get 20% tax relief (despite not paying tax) and pay 0% tax on the way out, as she has spare PA.

It's moot anyway as it's specifically not allowed to employ your spouse to care for you, as above.

p00hsticks

michaels said:

NedS said:

As mentioned previously (I believe), to be considered genuinely self employed by HMRC, your wife must be carrying out a trade or profession, and being a housewife isn't a recognised trade or profession by HMRC.

But being a cleaning operative or a food preparation operative or a laundry operative or an administrator or a child minder or a taxi driver is?

Why are we skirting around the obvious here ? These are mainly minimum wage jobs.

I've never personally seen Mrs michaels, but is she so unattractive (or unforthcoming) that bedroom services would not pay better ?